When former President Donald Trump moved to lower drug costs for Americans, he was building on the work of the bipartisan idea. In April, he signed yet another executive order that sped up the process to allow states to import drugs from Canada. Chiefly, the order directed Robert F. Kennedy to work to advance the program. Even that was not enough, since it mandated states must make these changes within 90 days. As various states, including Colorado, prepare their own Canadian drug import programs, the initiative raises questions about its impact on Canada and pharmaceutical pricing.
The executive order comes at a time when drug prices in the U.S. are still soaring unabated. A 2024 year report shows that our prices are 2.78 times higher than in 33 other peer countries. This imbalance has led many states to look for more affordable drugs in Canada. Over there, prices are said to be an average of 44% of what they are in the U.S. Now, Florida is the first state to win FDA approval for its importation program as allowed under federal law. This would be a remarkable win for the state.
His directive demands immediate action from the Department of Health and Human Services. They need to figure out new pricing models for drugs in the next 30 days. The review board will reference justifiable, publicly-available prices from 11 comparator countries. This is informed by data from Germany and the United Kingdom to help shape their negotiations. It’s a sensible approach to bringing down U.S. drug costs to better reflect what’s being paid in these countries.
The executive order had already set off a mad rush by states trying to get a head start on saving money through importing lower Canadian drug prices. Colorado is hoping for approval from the FDA for its import program any day now, but Colorado isn’t alone—other states have recently applied to launch their own import programs.
“is committed to implementing the executive orders related to drug imports” – FDA spokesperson
In 2018, health policy expert Michael Law warned of the hurdles that this initiative might face. He said he would find it hard to believe that any company in the United States with a brand would lower their margins. Otherwise, “they’re not going to ship the whole world’s supply of drugs up to Canada only to have them come back down to the U.S. at a cheaper price,” he said.
The Patented Medicine Prices Review Board (PMPRB) in Canada plays a vital role in regulating drug costs within the country. This board meticulously maintains price satisfaction and stops them from rising too high. Their efforts are key to ensuring that U.S. policy complements and works alongside Canadian pricing mechanisms. According to a spokesperson for the PMPRB, if a Hearing Panel finds that the price of a patented medicine is excessive, the Board has the authority to act. In addition, unlike most regulators, they have the governance authority to keep a price point low enough to be fair and enforce that price down.
Worries still remain over possible U.S. tariffs on pharmaceutical products from other countries. Now, Trump has threatened the pharmaceutical industry. He’s threatened the companies with federal investigations into their pricing practices should they not heed his calls for lowered prices. In his speech, he promised that American consumers would be the real beneficiaries of such efforts.
“The rest of the world is going to have to pay a little bit more, and America is going to pay a lot less” – Donald Trump
Furthermore, analysts have pointed out that if tariffs are enforced, they will do little to change drug prices coming from Canada. Katie Dangerfield of Global News noted that bringing drugs directly from India to Canada would help avoid U.S. tariffs. That would mean those products continue to fly mostly under the radar.
Law described how complicated the reality was. He said, “Particularly when it comes to generic drugs, I think as all of you know, India produces the overwhelming share of the world’s generic drugs. He also acknowledged the possibility for some positive spillover between the U.S. and Canadian markets. He thinks it’s unlikely to be a direct threat to Canada itself.
The background noise from the current debate over drug pricing and importation has unintentionally opened the door to a larger conversation about global supply chains. Today, about 80 percent of the pharmaceutical ingredients we use in North America come from overseas, primarily India and China. This dependency on international sources adds grayness to the story on drug prices and affects policy-making.
If states like Colorado and Florida keep working to find ways to import less-expensive medications, the future of drug pricing may gradually start to change. For years, states and advocates have floated this concept that states can procure drugs more efficiently. Today, thanks to Trump’s executive order, this idea is taking off in a huge way.
